The National Trust is among a number of charities which have warned the prime minister that a “loophole” in new consumer rights rules could cause them to lose critical funding.
Coming into force next year, the Digital Markets, Competition and Consumers Act 2024 is intended to minimise “subscription traps”, where consumers are misled into signing up through a “free trial” or reduced price offer.
Under the new legislation, members of the public are entitled to cancel a subscription contract during a two–week “cooling–off” period.
The National Trust and other charities claimed that the new legislation would pose a threat to their business models, whereby they earn significant income through membership schemes.
In a letter addressed to Keir Starmer, the charities warned the new rules allow people to sign up as members and enjoy benefits, such as free entry to museums and sites, for a 14–day period before claiming refunds.
The news comes after the National Trust, in July, announced plans to cut 6% of its workforce to save £26m after previously reporting an operating deficit of £43.9m in its most recently filed accounts.
Act could ‘cripple the very future value of membership’ as income model
The signatories of the letter, seen by the Times, were led by the National Trust’s director-general, Hilary McGrady.
Additional signatories included the heads of the Tate, Historic Royal Palaces, Victoria & Albert Museum, the Royal Horticultural Society, the Royal British Legion and Wildlife Trusts.
In their warning about the act’s impact, they wrote: “Not only has it put at risk our ability to claim gift aid on memberships, but it creates onerous new burdens.
“The proposed cooling–off period would create a loophole that could allow people to join charities as members and enjoy benefits, such as free entry to sites, for a two–week period before claiming substantial refunds for the rest of the year.
“This threatens to cripple the very future value of membership itself as a functional model of income generation for charities with visitor models – currently worth hundreds of millions [of pounds] to charities across the UK every year.”
The act was introduced by the previous Conservative government, but the rules are set to be implemented by August next year.
‘The legislation would add to cost burden’ in current climate
A National Trust spokesperson told Civil Society: “Up to now, membership has been treated as a charitable donation by law and this is part of a long-held recognition that UK charities are fundamentally different from commercial businesses.
“Charities are currently facing sustained financial pressures, due to the difficult economic climate. This legislation would add to that cost burden and see more charities having to reduce their vital services.
“Just last month, the government made a firm commitment through the Civil Society Covenant to support our sector: closing this loophole would be a clear demonstration of that commitment.”
A government spokesman said: “Our plans to protect consumers from rip–off subscriptions will not unfairly affect charities, and we continue to engage closely with them to understand their concerns.”
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